Details of the World Bank’s climate finance flows to developing countries are being poorly disclosed and may be hiding discrepancies and allowing for dubious claims, according to a new report by Oxfam,
In a new report “Unaccountable Accounting“, Oxfam audited the World Bank’s reported $17.2 billion climate finance FY2020 portfolio to discover it could be off by as much as $7 billion. The Bank is the largest multilateral provider of climate finance, accounting for 56% of the total flow from all multilateral development banks combined.
The issue of climate finance remains a big sticking point at the UNFCCC climate talks. Developing countries need more confidence in donors’ promises about the amount and types of climate finance that is reaching them in order for the talks to be successful.
Rich countries promised by 2020 to be paying $100 billion a year in climate finance to help low-and-middle income countries cope with the effects of climate change and to pursue their own clean energy development. The issue will become important again at this year’s summit in Egypt.
“The Bank’s public disclosure of its climate finance is like a faulty thermometer that’s currently reading 17.2 billion. We’ve found that it could be off by 40% in either direction and as such we simply can’t be sure of the actual value. Our concern of course is the worst-case scenario – that the Bank could be significantly overstating its contribution to the cause,” said Oxfam’s Climate Change Policy Lead, Nafkote Dabi.
“Climate finance is a lifeline to some of the world’s poorest people and countries. It is also a vital component of these global negotiations that depend upon a consensus agreement to keep the world safe. Without better disclosure, the World Bank is asking us all to take too much on faith. These funds are too important for that,” said Dabi.
“It is alarming – at a time when climate change is driving such damage and poverty and hunger around the world – that we could find so little clarity about the quality and quantity of these financial flows. It is more worrying that developing countries are being sold this promise on trust rather than on public evidence.”
Oxfam looked at 2020 data and sought to recreate the Bank’s published climate finance numbers by applying the Bank’s methodology and using the information currently reported by it. They found that the level of detail available was so inadequate that, for all the public is able to verify, the Bank’s claims could be off by as much as 40%.
Other institutions look to the World Bank to provide a precedent on matters of policy and practise. “Other financiers will follow the Bank’s lack of disclosure. Stakeholders like developing country governments do not have the right information to hold them and other rich donor governments to account. This introduces a significant deficit of confidence to the UN climate negotiations,” Dabi said.
“This audit exposes the danger that some climate finance claims could simply be greenwashing, which would lead to a dangerous under-investment in poor countries’ mitigation and adaptation efforts,” she said.
The report also notes that rich countries have already fallen $16.7 billion short of their $100 billion promise. To make matters worse, more than 70% of what they did mobilize was in loans, placing even more strain on poor country budgets when they have to pay it back.
Oxfam is calling on the Bank to disclose its climate finance assessments, including evidence that supports its calculations, in its reporting on all projects it claims have climate finance. The entire World Bank Group should begin public reporting in a standard and consistent manner, including with a trackable database.